Small businesses and freelancers with good sales can be profitable on paper, but struggle to pay their bills because of poor cash flow. Sending timely and easy-to-understand invoices for the products you sell or services you render can help you avoid money shortages. Using the standard information found on most invoices, you can create your own system that helps you collect your receivables sooner rather than later.
List the Information For the Invoice
Decide what you want to put on the invoice. Common invoice information includes the following:
- Name and address of your business
- Date of the transaction
- Transaction description
- Unit price of product sold
- Number of units sold
- Total order price
- Sales tax
- Name and address of customer
- Purchase order number (if used by the customer)
- Customer contact
- Payment terms
- Discount offer
- Payment options
Description of Items
Your transaction description details what the customer ordered in sentence or phrase form. The unit price is the price per item you sell. Your payment terms describe when the money is due to you, as well as any penalties for late payment. Payment options include instructions for how the client can pay you, such as check made payable to your company name, a PayPal email address or notification that you accept credit card payments by phone. If you want full payment within a specified number of days, such as 30 days, include the phrase, “Net 30 days.” If you want to offer an early payment discount, include something like, “3 percent discount for payment within 10 business days of this invoice.”
Generate an Invoice Number
When you call people who owe you money, especially larger clients and those who do repeat business with you, they often will ask you for the invoice number you’re calling about. If you get a call about an invoice from a customer, you might be able to find the document more quickly if you have your invoices numbered.
The easiest way to create a numbering system for your invoices might be to start each invoice number with the date, and then include a numeral corresponding to how many invoices you are writing that day. For example, if you will only be writing one invoice on April 25, 2015, your invoice number would be 42520151. If you write a second invoice on that day, the invoice number would be 42520152. This system helps you prevent accidentally using the same number on two different invoices. You can use a letter instead of a numeral to follow the date and/or use a dash to separate the date from the final numeral or letter. For example, you might use 4252015-1 or 4252015-A for the first invoice you write on April 25, 2015.
Create the Invoice
Once you know what information you want to include on your invoice and have an invoice number, create your document. Put your company name and contact information at the top, followed by the customer information. It might be simplest to list the information using headings, followed by a colon, then the information. For example, a caterer might set up an invoice for cupcakes with this information:
Invoice #: 4252015-1 Item ordered: Cupcakes Unit price: $2.50 Total units: 144 Total Price: $360 Tax (at 7%): $25.20 Total Due: $385.20
Sam Ashe-Edmunds has been writing and lecturing for decades. He has worked in the corporate and nonprofit arenas as a C-Suite executive, serving on several nonprofit boards. He is an internationally traveled sport science writer and lecturer. He has been published in print publications such as Entrepreneur, Tennis, SI for Kids, Chicago Tribune, Sacramento Bee, and on websites such Smart-Healthy-Living.net, SmartyCents and Youthletic. Edmunds has a bachelor's degree in journalism.